UT agency's chief draws faculty fire

$1,200-a-day salary questioned as cuts loom

1/28/2013

BY IGNAZIO MESSINABLADE STAFF WRITER

Rick Stansley, Jr., was appointed by Ohio Gov. Bob Taft to UT’s Board of Trustees in 1999.

While the University of Toledo slashed millions from its budget, squeezed more tuition out of students, and increased class sizes, it also was funneling millions into its economic development arm and paying $1,200 a day to the man who manages that agency.

UT’s Science, Technology, and Innovation Enterprises was reinvigorated in 2008 with $10 million from the university. Since then, its name was changed to University of Toledo Innovation Enterprises — often called UTIE — and it has invested about $6.3 million in several companies, some of which have lost money.

At the helm of the agency is Rick Stansley, Jr., a former UT trustee chairman, who was first appointed to sit on the board of the nonprofit agency and then, about a year later, hired by UT President Lloyd Jacobs to run it as a paid contract employee. His contract, obtained by The Blade, shows Dr. Jacobs’ signature along with Mr. Stansley’s, but not any from the UT Board of Trustees or the UTIE Board of Directors.

He was paid $307,200 last year.

Mr. Stansley, a graduate of Southview High School, dropped out of college after a combined two years at UT and Lourdes College. He was appointed by former Ohio Gov. Bob Taft to the UT Board of Trustees in 1999 and was chairman when Dr. Jacobs was hired as president in 2006 after the UT-Medical University of Ohio merger. When Mr. Stansley’s final term as trustee expired in June, 2009, he was appointed chairman of the UTIE board.

UTIE INVESTMENTS

According to an email Rick Stansley, Jr., sent to The Blade on Thursday, UTIE investments include:

$657,392 to ADS BioTechnology, a pharmaceutical company.

$300,000 to MMD, which makes microchips and sensors.

$2 million to Xunlight, which makes solar panels.

$830,878 to Rocket Ventures Fund.

$300,001 in the form of a CD at Huntington bank for Rocket Ventures LLC.

$250,000 to Accord Biomaterials, a biomedical company.

$146,096 to Freedom Meditech, a biomedical company.

$549,996 to Nextronex, which makes electrical inverters.

$400,000 to Turning Point, a bioengineering company that is developing a “core training device.”

$500,112 to Mithridion, a pharmaceutical company.

$73,647 to MWOE Holding, a company working with fuel-cell technology.

$276,000 to X26 HOLDING, which is also called Lucinth Tech. It is a thin-film solar window maker.

The investments Mr. Stansley provided total almost $6.3 million.

He said an additional $1 million is “committed to different companies” for investments.

A Sept. 19, 2011, email obtained by the Blade shows that UTIE gave Xunlight $3 million rather than the $2 million listed by Mr. Stansley; nearly $1.4 million to MWOE rather than the $73,647, and $50,000 for Incenu.

Mr. Stansley said UTIE “wrote down” the investments on Xunlight and MWOE. “So when I say we have had losses, those would be losses,” he said.

A wholly owned subsidiary of the university, UTIE in turn owns several for-profit companies. It technically has no employees, but at least three full-time UT employees are assigned to work there under Mr. Stansley.

Dr. Jacobs said he waited the “requisite year” before paying Mr. Stansley for his services running UTIE “just to be careful.”

Since 2011, Mr. Stansley also has been board chairman of Rocket Ventures LLC, a $22.5 million venture-capital fund that used to be run through the Toledo Regional Growth Partnership. That year, UTIE and Rocket Ventures LLC forged a partnership. The two organizations are separate, but they operate under the same roof in UT’s Research and Technology building at 2600 Dorr St.

Faculty reaction

Some UT faculty members are vexed by the funding for UTIE and Mr. Stansley’s salary while cutbacks are spreading across the university — particularly a recent proposal to increase teaching loads for full-time professors that will translate into bigger class sizes and expected reduced course offerings.

The university has faced multimillion dollar shortfalls for each of the past three fiscal years. Leading up to fiscal year 2011, its projected deficit was $2.7 million; leading into fiscal 2012, it was $32.9 million, and heading into fiscal 2013 it was $25.1 million. UT now faces an estimated $30 million to $36 million shortfall for fiscal 2014, which runs from July 1, 2013, through June 30, 2014.

“I don’t know how many universities have the former chairman of the board of trustees take a paid position from the university,” said Mike Dowd, president of the UT Faculty Senate. “Is providing funding for Rick Stansley’s activities a higher priority than providing the resources for the instructional mission of the university?”

But Mr. Dowd’s bigger question is about effectiveness: “What has been the return on investment, and has this been a wise use of the university’s money?”

Linda Marie Rouillard, vice president of the UT chapter of the American Association of University Professors, said UT’s priorities need to be reassessed. She questioned why the university would spend a total of $1.5 million for Mr. Stansley’s contract, which runs through June, 2015.

“Our administration is currently declaring a $36 million shortfall for [fiscal 2014], yet it is building a $36 million simulation center on the health science campus,” Ms. Rouillard said. “The Jacobs administration claims that these financial difficulties require increasing minimum class sizes to 30 undergraduates per class, yet it offered Mr. Stansley a contract worth $1.5 million. Exactly what has he produced, who has benefited, how much revenue has he generated for the university?”

Hiring defended

Dr. Jacobs defends his hiring of Mr. Stansley and said there was no conflict of interest.

“He is energetic, interested, committed, hard-working, smart, so with all of that, he seems to me to be the right person. He has great business sense [and is] an entrepreneur himself,” Dr. Jacobs said. “What he earns for this work in my mind is pretty much middle of the road for that type of executive.”

Mr. Stansley’s compensation exceeds other publicly funded executives who oversee economic development in the Toledo area.

By comparison, Paul Toth, president of the Toledo-Lucas County Port Authority, is paid a base salary of $178,500. The port authority has 37 full-time employees and eight part-time employees, and its Northwest Ohio Bond Fund has a lending capacity of $140 million, with $70 million in outstanding debt.

Paul Syring, Toledo deputy of mayor of external relations, in charge of economic development for the city, is paid $92,000 a year.

But by university standards, Mr. Stansley is not near the top of the salary scale.

Dr. Jeffrey Gold, chancellor and executive vice president for biosciences and health affairs, is paid $463,057 a year, and Scott Scarborough, provost and executive vice president for academic affairs, receives $415,541. Dr. Jacobs is paid $393,631 as university president. He also gets a car, house, and expense account from the university. Under his contract he received a longevity bonus of $150,000 after June 30, 2011, and will receive one again after June 30.

Mr. Stansley has received $1,200 a day under his contract that started on June 24, 2010, and runs through June 20, 2015. His invoices have charged the university for working on some holidays, such as Memorial Day and Independence Day last year. Mr. Stansley said he was selected to run UTIE because he was integrally involved in creating UT’s “Tech Corridor,” which was a brainchild of former UT President Dan Johnson.

Mr. Stansley and his three brothers owned a construction material company until it was sold six years ago. The business, Integrated Resources, had 600 employees and did $100 million in business a year, Mr. Stansley said. He now owns part of Stansley Mineral Resources, a company run by his brother, Jeff Stansley.

“I think I provide value to the organization, and Dr. Jacobs is a very practical guy, so the day that stops I don’t think he will hesitate to get rid of me,” Mr. Stansley said.

Changing role

Dr. Jacobs said investing in companies to create jobs is now a integral part of the university’s mission, along with education.

“The world is calling on universities the last five years to spend more time, effort, and commitment building the civic infrastructure of the communities in which they find themselves,” Dr. Jacobs said.

Three past Ohio governors have called on universities to engage in economic development, he said.

“Indeed, there has been discussion that is yet another mission for universities … and this university has a long history in that,” Dr. Jacobs said. “It precedes me, but I would say that we have re-emphasized that in the last five years. We’ve pushed it harder.”

Part of that harder push came in the form of the $10 million from UT in 2008 for UTIE. Dr. Jacobs stressed that the $10 million came from revenue received through “auxiliary services,” such as vending machine profits — not tuition dollars or student fees. The breakdown for the $10 million includes $2 million from parking fees, $1 million from food service, $2.12 million from the campus book store, $4.37 million collected from rent from the Veterans Administration building at 3333 Glendale Ave., and $500,000 from copy machines.

“I am in favor of that. I think it is the right trend for universities,” Dr. Jacobs said. “The work of a university is not finished when you hand someone a diploma.”

UT’s president said the $10 million devoted to the effort was a “pittance” for that type of work.

“Ohio State University and Ohio University in Athens [last year] put together a [$35 million] effort very similar to [UTIE] to build commercialization, so this is a sweeping trend,” Dr. Jacobs said.

Ohio Board of Regents Chancellor Jim Petro was not available for comment but had issued a statement.

“At the Board of Regents, we foster conversation on commercialization and economic development across the state and encourage universities to do what they can to bolster relationships with the business community,” Mr. Petro said in the statement. “Decisions relating to these relationships are local issues and are up to the individual university’s board of trustees.”

Dr. Jacobs acknowledged that some faculty members disagree with shifting money to Mr. Stansley’s operation.

“We have a few people who long for the Middle Ages, during which time universities didn’t do this kind of thing, and that is good, they have a right to their feelings. … But longing for the Middle Ages is probably not what we need to be doing in the 21st century,” Dr. Jacobs said.

UTIE’s portfolio

Mr. Stansley acknowledged that some companies in UTIE’s portfolio have experienced losses, but others such as Nextronix, which makes electrical inverters, are expected to be profitable in one or two years.

Under his tenure, only one company in UTIE’s portfolio — Incenu — has been profitable.

Mr. Stansley said UTIE can take credit for creating about 35 jobs.

Incenu writes business plans for companies, including some of the companies that are later funded by UTIE and operate out of the UT business incubator. The firm is owned by UTIE, and Mr. Stansley is listed as its director. Mr. Stansley said he has never collected a paycheck from Incenu or any of the other companies associated with UTIE.

“Incenu has already turned a net profit, and those proceeds are used to help UT’s business school for things like funding interns and administrative support costs,” Mr. Stansley said.

Incenu has no full-time employees, but several people work for the firm on a contract basis, including UT associate lecturer Brandon Cohen.

“At the high point in the last year we probably had $140,000 in retained earnings, but that is cash flow we use to pay people who do the work,” Mr. Cohen said.

The company’s clients include Isofoton North America in Napoleon. Incenu sold “at least $300,000 worth in professional client services” last year, Mr. Stansley said. That translated to about $100,000 in net profit, he added.

Dr. Jacobs, Mr. Stansley, and others such as UT Trustee William Koester, who also sits on the UTIE board, expect to see a return on the millions the university has invested in UTIE and the companies it has started.

Mr. Koester said Mr. Stansley’s salary is appropriate, given his level of responsibilities.

“I have been involved with UTIE since its beginning and before Rick was made the president. It floundered and wasn’t doing anything,” he said. “Rick has grabbed ahold of it and made things happen.”

Contact Ignazio Messina at: imessina@theblade.com or 419-724-6171.

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